Reddit Shares Surge After Successful NYSE IPO

Wall Street reacted very favourably to the initial public offering of social media platform Reddit on the New York Stock Exchange on Thursday.

Shares of the San Francisco-based company opened at $47 on the New York Stock Exchange on Thursday, after pricing at $34 (the high end) in the IPO.

At one point Reddit’s shares rose a staggering 70 percent, peaking at $57.80 a share, before ended trading at $50.44 (a 48 percent increase). It raised $748m

Last week Reddit in a regulatory filing revealed it had been seeking a valuation of up to $6.4 billion (£5bn), but it ended up being valued at $8.02 billion (£6.4bn).

Successful IPO

However this is still lower than what the company was worth in 2021, when a $1.3bn funding round valued it at $10bn.

Reddit had filed for its offering in February 2024, which at the time had prompted concern from Reddit users and moderators, worried the site would go downhill as it focused on the interests of investors rather than those of users.

Reddit moderators have a history of conflict with the company’s management, including shutting down high-profile discussions last year in protest against a decision to begin charging for the Reddit API.

The company did not back down on its decision, however.

Regulatory filings revealed the company, founded in 2005 – nearly 20 years ago – has never made a profit and lost more than $90 million (£71m) last year. The firm still relies on advertising for the vast majority of its revenue.

Reuters reported however that Reddit had lured investors by positioning its content as a training ground for artificial intelligence (AI) programs. It noted that Reddit had recently struck a data licensing deal with Google worth about $60 million a year (that licensing deal is being examined by the FTC).

“At the core we are a growth company. Achieving our mission means that we want to grow users and community,” Jen Wong, Chief Operations Officer at Reddit was quoted as saying.

Poorer cousin?

Reddit’s IPO has been a long time coming. Reuters noted that the firm had confidentially filed for an IPO in December 2021, but a stock rout caused by Russia’s war in Ukraine and the Federal Reserve’s hiking of interest rates froze much of the IPO market and pushed it to delay.

After its launch in 2005, Reddit has remained a consistent presence in the social media sector, when its iconic logo – featuring an alien with an orange background – is one of the most recognized symbols on the internet.

Its 100,000 online forums, dubbed “subreddits,” allow conversations on a huge range of topics.

But since its foundation Reddit has remained the poorer cousin to the likes of its much larger cousins Facebook and X (formerly Twitter), and has failed to reap the financial success of those platforms.